Australian Regulator Suspends License of FTX Australia
FTX came under fire on account of the misappropriation of its client funds. However, as the case is under investigation more dark secrets concerning the internal practices of the firm are surfacing.
Recently, ASIC, the main financial regulator in Australia, issued a suspension order for the FTX branch operating in the region. Despite the greater part of the crypto exchange being entangled in controversy and regulatory troubles, it seems that the Australian wing was still operational.
It is only recently, that the regulators in Australia have revoked the license of FTX in their region enforcing a complete halt of its services. The cancellation was announced on 19 July by the Securities and Investment Commission of Australia (ASIC).
In the meantime, the firm has been granted a period of remaining partially operational until July next year so that it can close all dealings with active clients.
The regulators in the region have granted FTX the duration of next year as the maximum time to wrap up its existing dealings. As per the report issued by ASIC, the Australian subsidiary of FTX hosted around 30 thousand retail and 132 local commercial entities in its clientele register. Last year in November ASIC suspended the Australian Financial Services or AFS license for FTX.
In this manner, the derivatives and foreign exchange trading services of the Australian wing went defunct for FTX. The suspension order for the AFS license arrived at the heel of FTX headquarters in the Bahamas filing for bankruptcy on November 2022.
On the same occasion, Australian regulators nominated KordaMentha as a consultant for the restructuring process for FTX Australia and another subsidiary namely FTX Express. During the recent court proceedings, the head of FTX global restructuring revealed that he was able to locate $7 billion in liquid assets but the total outstanding consumer debt in misappropriated funds totaled $8.7 billion.
FTX 2.0 to Hit Cryptocurrency Markets Soon
Some media reports have recently surfaced sharing the attempts of FTX to make a comeback. Other liquidated crypto entities such as 3 Arrow Capital and Terra Luna project have been making the same attempts.
Media reports suggest that FTX can emerge as a new cryptocurrency exchange under a new name and management. The restructuring team of FTX has conducted meetings with potential investors and other stakeholders who have shown an interest in backing a reboot.
Meanwhile, BlockFi a crypto lending enterprise that had $1.2 billion tied with FTX and Alameda Research has been entangled in court proceedings. The CEO of the now defunct enterprise, Zac Prince is facing legal scrutiny from the regulators on account of ignoring the high-risk warnings issued by the risk management team of BlockFi.
The team warned Prince about the 7bb and 11bb unaudited tokens. However, Price ignored their warnings and suggested to keep dealing with the massive borrowing size of the firm using only FTT as collateral without diversification with other assets such as GBTC shares.
When FTX filed for bankruptcy BlockFi offered it a $400 million credit line in 2022. The firm resorted to unsuccessfully recalling its debt from Alameda in 2022 but ended up lending it an additional $900 million collateralized by FTT.
